Major Wall Street firms are revising their oil price forecasts upward as crude prices rally despite initial expectations of a supply surplus in 2026. Goldman Sachs and Morgan Stanley both raised their price targets for Brent and WTI crude, with Goldman's commodity desk specifically adjusting forecasts for markets excluding Iran.

Analysts had entered the year projecting a 2.5 to 3 million barrel per day surplus for the first quarter, but several unexpected supply disruptions have altered the equation. Severe weather impacted US crude production, while a fire at a Kazakhstan power plant disrupted output there. Additionally, the CPC pipeline, expected to resume operations in early January, faced delays.

The combination of reduced supply and robust demand, particularly from cold weather increasing heating oil consumption, has prevented the inventory buildup analysts anticipated. While significant crude remains on water, experts question whether floating stockpiles can quickly address demand spikes or supply gaps. China's continued stockpiling at the year's start has also kept surplus crude out of visible inventory centers, contributing to tighter market conditions.